South Africa Seeks to Regulate Crypto as a Financial Asset: What You Need to Know

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The South African Reserve Bank announced plans to launch cryptocurrency regulations in 2023 to classify and treat digital currencies as financial assets.

What happened: South African Reserve Bank Deputy Governor Kuben Chetty outlined plans for new crypto legislation on July 12 in an online series hosted by PSG. The legislation aims for the Financial Intelligence Center Act (FICA) to regulate the crypto space. This prevents terrorist financing, tax evasion, money laundering and other illegitimate acts that may occur in the sector. Rolling out this plan involves listing cryptocurrencies as a schedule under the FICA.

Crypto exchanges will be required to have a Know Your Customer (KYC) prerequisite for users, under the updated regulatory framework. The regulations will also require exchanges to provide a risk warning, for potential losses while trading or investing.

Why is this important: The South African Reserve Bank wants to stabilize digital innovation with investor protection by viewing cryptocurrencies as financial assets.

South Africa has seen a huge increase in crypto adoption in recent years, with around 13% of its population holding crypto in one form or another. Thus, the regulation of these digital currencies aims to protect the country’s six million cryptocurrency holders from extreme market volatility.

Despite the recent downward trend in the market, as the crypto space continues to grow and intertwine with many long-term industries, regulation is crucial. South Africa’s latest attempt to regulate cryptocurrencies will benefit the industry as well as investors for years to come.

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